PM Daily Market Commentary – 10/13/2016

PM Daily Market Commentary – 10/13/2016

Gold rose +2.60 to 1259.40 on moderate volume, and silver rose +0.02 to 17.52 on moderate volume also. The dollar fell, wiping out the gains from yesterday’s dollar rally, but the drop in the buck didn’t seem to provide much support for gold and silver.

On the chart, gold printed another spinning top; most spinning tops are useless for determining direction, and this one is no exception. Gold remains below its 200 MA – mostly, gold just seems to be moving sideways following the large move down that happened last week. Gold’s lack of response to the falling dollar is not a great sign – I would have expected more of a rally than this. In Euros, gold appears to have run into resistance at the 9 EMA and may be setting up for a move lower.

December rate-rise projection is at 60%, down 4% from yesterday.

Gold open interest at COMEX fell -4,952 contracts.

Silver tried rallying today but the rally failed, and silver sold off steadily into the close. Silver printed a doji candle today; no help as to direction. Silver remains above its 200 MA and its prognosis is unchanged. It needs a close above the 9 EMA and/or a swing low to start the process of a change in trend. The plunge in copper most didn’t do any favors for silver.

The miners rallied again today, with GDX up +1.82% on moderate volume, and GDXJ was up +2.22% on moderately heavy volume. GDX printed a swing low today, and it managed to close above the 200 MA, but the spinning top candle print is a shooting star – the epitome of a failed rally. The miners went vertical in the afternoon but then ran into a wall of selling, and sold off into the close.

Platinum fell -0.96%, palladium fell -1.89%, and copper cratered, dropping -2.50%, smashing through two moving averages, making a new low and entering into a clear downtrend. In fact, all three metals made new lows. Gold and silver outperformed the rest of the group today.

USD made a new high today in Asia, and then promptly sold off for the rest of the day, closing down -0.44 to 97.52, almost at the low. The buck printed a bearish engulfing, which has a 20-30% chance of being the high. The Euro printed a swing low today; that accounts for the dollar’s fall. It was a fairly large move down for the buck, but it did not seem to help PM much at all.

Crude rose +0.26 [+0.52%] to 50.44. Crude took a bit of a ride today, selling off hard following the bearish-looking petroleum status report (inventory build of 4.9 million barrels), only to reverse direction and rally a few minutes later, eventually ending the day in positive territory. When something rallies on bad news, that’s quite bullish, and that’s what crude did today. Based on this, I expect crude to make new highs in the near future, barring any strongly negative oil-related news. Crude printed a bullish harami; only a 21-27% chance of a low. Given context, I think the odds are better than that.

SPX fell -6.63 to 2132.55. SPX sold off hard in the first half hour of trading, plunging below 2120 support, but then buyers appeared, driving the price steadily higher for most of the remainder of the day. Utilities (XLU:+1.24%) led, while financials (XLF:-0.97%) trailed. This pattern feels like a decline in rate-rise concerns. Candle print was a “high wave”, which the candle code says is a 25-40% chance of a low. VIX rose +0.78 to 16.69.

TLT rallied +0.38%, money flowing from stocks to bonds today. It wasn’t a dramatic move, which underscores the weakness in bonds right now, but it does hint at risk off.

JNK fell -0.14%, closing below the 9 EMA. It is possible that JNK has put in a top here; JNK should have done better given the rally in oil. Risk off.

CRB rose +0.57%, wiping out yesterday’s fall. 3 of 5 commodity groups rose, led by agriculture. CRB remains in a medium term uptrend.

For whatever reason, gold just can’t seem to get anything going to the upside right now. That’s just the way it is. Even the miners had a failed rally, for no reason I could fathom. Given its oversold condition, I expected gold and the miners to launch today off the dollar’s plunge. Since they didn’t, it makes me worry. We might just have another leg down ahead of us in the near future. Contrast that with oil, which rallies even after a bearish petroleum status report. The recent move higher in PM might just be a very modest dead cat bounce. I’ll give it one more day.

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